Crypto markets experienced heightened volatility on Wednesday as Federal Reserve Chair Jerome Powell’s hawkish comments unsettled leveraged traders.
Liquidations soared to over $200 million within an hour across all digital assets as Bitcoin (BTC) dipped below $116,000 during Powell’s remarks, according to RialCenter data.
The central bank kept interest rates unchanged, with Powell emphasizing potential inflationary pressures from tariffs, although two officials argued for a rate cut.
Read more: Bitcoin Tumbles Below $116K as Jerome Powell Delivers Hawkish Remarks
Later, BTC rebounded above $117,000, still down 0.8% for the day and trading at the lower end of its three-week range. Ether (ETH) fell as much as 3%, then recovered to $3,750, showing a slight decline of 0.6% over the past 24 hours.
Altcoins initially saw sharper losses but quickly regained ground. Solana’s SOL, Avalanche’s AVAX, and Hyperliquid’s HYPE tokens fell 4%-5% before recovering, while BONK and PENGU dropped 10% each before bouncing back.
In the traditional market, Meta and Microsoft reported strong quarterly earnings, causing their stocks to rise 10% and 6% respectively after regular trading hours.
“The market is increasingly starting to think the Fed may be behind the curve,” said Matt Mena, an analyst at digital asset issuer 21Shares, in a market note.
“Last week’s PCE print marked the second consecutive soft reading, and consumer spending is weakening,” he added. “With unemployment ticking higher and real yields remaining restrictive, maintaining such tight policy risks overtightening into a broader slowdown.”
Mena noted that the current situation is reminiscent of the last quarter of 2023, characterized by “softening inflation, rising political volatility, and a Fed constrained by lagging indicators.”
He suggested that “the stage is set” for the Fed to pivot to lower rates, which could propel BTC to $150,000 by year-end.
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